New action plan to ease Japan’s woes
With concrete new action plans in place to overcome long-standing legal concerns, the Vietnam-Japan partnership will enter a new chapter of development in the next few months.
The Ministry of Planning and Investment (MPI), the Japanese Embassy in Vietnam, and the Vietnam-Japan Economic Committee under the Japan Business Federation last week signed a memorandum of understanding, kick-starting the seventh phase of the Vietnam-Japan Joint Initiative (VJJI).
“The VJJI is an important policy dialogue between Japanese businesses and Vietnamese government agencies, through which practical proposals and recommendations have been made over the past 15 years, greatly helping improve the local business climate,” said Nguyen Chi Dung, Minister of Planning and Investment.
To be carried out over 17 months, from August 2018 to the end of 2019, the plans of action will cover 10 groups of issues, including those left by the previous phase as well as new content. The issues include regulations for foreign investors in Vietnam as prescribed in the laws on Investment and Enterprises, the Land Law, and others; the reform of state-owned enterprises and the stock market; supporting industry development policies; labour and salary; the legal framework for public-private partnership (PPP); the legal framework
for the construction of gas pipelines; and the establishment of companies and opening of branches in the services sector.
According to the Japanese side, the removal of retroaction for incentives approved in investment certificates and business registration caused difficulties for foreign investors and even unpredictable losses. Besides, while the Law on Investment (LoI) (2005) had regulations to ensure foreign investors’ legitimate rights, the current LoI does not.
Therefore, the new action plan will work on the policies for keeping retroaction for incentives approved in the aforementioned legal documents, while amending Article 13 of the LoI towards adding more subjects to be ensured with legitimate rights.
In regards to salary and labour, overtime and sectors subject to labour leasing remain major problems for Japanese investors, making them insecure about their future developments. Under the action plan, both sides will discuss the possibility of revising these regulations towards allowing them to decide the overtime cap based on their work demands, in line with prevailing rules, while enlarging the list of sectors subject to labour leasing.
As for the PPP legal framework, Japanese investors are concerned about the transformation of public projects into PPP projects, especially when using official development assistance (ODA) funds; incentives for PPP bidders; government guarantees for foreign currency exchanges and conditions for contract cancellations; and land use rights and land-related asset mortgages.
Nguyen Dang Truong, director of the MPI’s Public Procurement Department (PPA), said that the PPA is working with the Japan International Cooperation Agency (JICA) on building a legal mechanism for the use of ODA as Vietnam’s counter-funding in PPP projects, then creating an important foundation for development in the PPP Law, which will be considered at the
National Assembly in November 2019 and is slated to be approved in May 2020.
Launched in April 2003 as a result of the special co-operation between the two governments, the VJJI has been implemented in six phases with a total of 473 plans of action. Over the past 15 years, the VJJI has contributed significantly to increasing Japanese investments in Vietnam, while helping competent Vietnamese agencies fine-tune laws and policies. As shown in the latest survey on the performance of Japanese businesses in Asia and Oceania in 2017, announced in February 2018 by the Japan External Trade Organization’s Hanoi Office, 46.9 per cent of respondents in Vietnam complained about the imperfect legal system and the inconsistent performance of legal documents, down 1.5 percentage points from the year before. In addition, 39.5 and 38.2 per cent expressed concern about complicated administrative procedures and underdeveloped infrastructure, respectively, down 2.3 and 6.2 percentage points.
According to the MPI’s statistics, Japan overtook the heavyweight South Korea to become Vietnam’s biggest foreign investor in the first seven months of 2018 in the country, with the total registered investment capital of $6.88 billion, or 30 per cent of Vietnam’s total registered foreign direct investment capital during the period.
- FDI in Vietnam – Where is the Investment Going? (12/08/2019)
- HCM City solicits investment in infrastructure (30/07/2019)
- Vietnam - Japan Business Matching Symposium 2019 (29/07/2019)
- RoK’s rural development group to invest in smart farming in Vietnam (15/07/2019)
- FDI reaches record level in four months (08/07/2019)
- Powering 220 kV Southern Sai Gon - Urban District 8 transmission line (27/06/2019)
- EVFTA Press Release - Official Announcement from the EU (26/06/2019)
- PM calls on Korean investors to expand operations in Vietnam (12/11/2018)
- E-commerce golden pass for logistics (12/11/2018)
- Hoa Phu Industrial Park - The destination of success (12/11/2018)
- Long Thanh airport’s feasibility study approved (12/11/2018)
- Renewable energy projects spur foreign investment surge (02/11/2018)
- New innovation centre to provide grounds for Vietnam 4.0 (02/11/2018)
- National Assembly set to ratify historic trade deal (02/11/2018)
- Overseas financiers outline obstacles (02/11/2018)
- Moody’s upgrades ratings on Vietnamese banks (01/11/2018)
- Foreign investors expand networks in Vietnam (01/11/2018)
- Altus Capital funded to invest in distressed Southeast Asian companies (01/11/2018)
- More FDI to reach southern region (01/11/2018)
- Foreign fashion giants set footprint in Vietnam through M&A (31/10/2018)
- [EuroCham Webinar] Decision 13 – Final FIT for Renewable Energy in Vietnam (23/04/2020)
- THE SITUATION OF ATRACTTING FOREIGN INVESTMENT IN THE FIRST 3 MONTHS OF 2020 (19/04/2020)
- Key infrastructure projects calling for investment in HCMC (08/07/2019)
- Bac Ninh licenses 116 FDI projects in seven months (22/08/2018)
- Binh Phuoc licenses 24 projects worth $1 billion (22/08/2018)
- Hue targets $56mil in investment this year (15/08/2018)
- Hanoi seeks approval for Vingroup’s $300 million IT park (31/07/2018)
- List of Project Calling For Investment in Lam Dong Province in 2018 (31/07/2018)
- Kien Giang calls for investment in 12 resort projects (31/07/2018)
- Decree amendments open paid TV firms to foreign investment (30/07/2018)
- Vietnam: Opportunities in the Waste-to-Energy Sector (24/07/2018)
- Can Tho City seeks investment for 54 projects worth $5.4 billion (20/07/2018)
- Hoa Lac High-tech Park aims for $1 billion investment in 2018 (19/07/2018)
- Large-scale undersea tunnel to be constructed next year (19/07/2018)
- THU THUA INDUSTRIAL ZONE (15/01/2020)
- Map of industrial parks in Vietnam (23/07/2019)
- 493 Projects Invested in Nghi Son Economic Zone and Industrial Zones (09/02/2018)
- Thai Binh Strives to Attract Investment Capital of VND 5000 billion in Industrial Parks and Economic Zones (07/02/2018)
- Vinh Phuc Adds 4 New FDI Projects in Industrial Zones (07/02/2018)
- Dung Quat EZ and Quang Ngai IPs Attracted 258 Projects with a Total Investment Capital of More Than US$ 11 Billion (30/01/2018)
- Solutions to attract Investment Capital into Industrial Parks in Bac Giang Province (19/01/2018)
- Nghi Son Economic Zone and Industrial Zones Received 66 new Investment Projects (08/01/2018)